BOSTON (WHDH) - The new GOP tax reform bill has some people in Massachusetts paying their taxes early.
The scramble to prepay property taxes has created a lot of confusion, and according to the IRS, the efforts may not pay off.
Homeowners across the country are hoping to side-step a provision in the recently passed tax law that puts a cap on income and property tax deductions.
Previously, the amount you could deduct was unlimited, but under the new tax plan, filers will be limited to $10,000 a year in total.
While most file for a standard deductions, 95 percent of those who do itemize their tax returns take the state and local tax, or SALT deduction, according to Tax Foundation analysts.
This is especially true for people who live in states with higher property taxes.
“We are going to be paying a lot more in taxes living in California, so I want to get as many deductions as I can in 2017,” said California resident John Baez.
So rather than miss out on those deductions next year, homeowners are looking to prepay and try to claim it on their 2017 return and get the full deduction.
Not every state or city allows you to prepay.
Tax experts say you should prepay early only if:
- You have enough money saved.
- You usually itemize your taxes.
- You usually pay more than $10,000 in overall state and local taxes.
- You are not subject to the Alternative Minimum Tax, which limits what you can deduct.
Friday is the last day Massachusetts residents have to prepay their property taxes.
The secretary of state said people can prepay the tax if payment is made and assessed this year, even if it is not due until next year.
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